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UGL boosted by infrastructure spending

Trevor Chappell

Engineering and property services firm UGL says activity in the infrastructure sector is picking up in the wake of the resources boom.

Chief executive Richard Leupen says the big turnaround in infrastructure spending the company has been forecasting is now turning into reality.

Investment in road and rail transport in particular, plus the power sector, had resulted in UGL winning or being shortlisted for significant projects, particularly on Australia's east coast.

"The prime minister has said he is the prime minister for infrastructure, the states are all talking about infrastructure spending - infrastructure is what we do more than anything else," Mr Leupen said.

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UGL's engineering business had lifted profit margins during the 2013/14 financial year, and the outlook for the division was improving, he said.

The company secured $4.3 billion in new projects in 2013/14, with the main growth in rail, transport infrastructure, power projects and maintenance.

UGL made a net profit of $62.1 million in the year to June 30, up 73 per cent on the previous year.

Underlying profit, which excludes one-off items such as restructuring costs, was $111.7 million, up 22 per cent.

The company is selling its property business DTZ to a private equity firm, and said it favours a capital return of $400 million to $500 million to its shareholders once that is completed.

The sale is likely be finalised between October and December, once regulatory approvals are received from the 52 countries in which DTZ operates.

UGL expects to use some of the $1 billion in proceeds from the sale to reduce debt, before issuing a distribution to shareholders.

Mr Leupen also said UGL would pursue a tender in NSW for another 520 double-deck passenger rail cars.

"Five hundred rail cars is worth about $1.5 billion, or thereabouts, plus 15 years of maintenance with them, so that's a big tender," Mr Leupen said.

In addition, UGL is looking to secure more engineering work in the defence sector, particularly with the navy.

UGL shares were down 17 cents, or 2.5 per cent, at $6.62 at 1340 AEST.